Lasell Village, a college-owned senior living facility in Newton that incorporates an educational component into its program, has been denied exemption from its $400,000 annual property tax bill.

Lasell Village, an academic senior living facility in Newton, must pay its fair share of city taxes, the state Appellate Tax Board recently ruled. Lasell Village had contested its $400,000 annual property tax bill, saying that the almost $40 million facility was covered under a charitable exemption law.

“It’s an early Christmas present for the city of Newton,” said John M. Lynch, who along with Stephen W. DeCourcey of the Boston law firm Lynch, DeSimone & Nylen represented the Newton Board of Assessors. “It solidifies its tax base … Anytime a community prevails, particularly in times like these, it’s very significant and very important.”

But the disagreement may not be over. Lasell Village intends to challenge the board’s decision. The Appellate Tax Board is a quasi-judicial agency within the state’s executive branch designed to ease caseloads at Superior Court and devoted exclusively to hearing and deciding cases on appeal from any state or local taxing authority. The case would likely move next to the Massachusetts Appeals Court.

“We obviously disagree and have started a lengthy litigation process,” said Thomas de Witt, president of Lasell College, which created the village in 1995. “We expected it but we will appeal and we expect to win.”

This isn’t the first time that the city of Newton and Lasell Village have clashed. City residents began fighting the development when it was first introduced in the late 1980s. Lasell ultimately was granted permission to move forward in land court after agreeing to add a classroom component to the elder care community, which is built on land zoned for educational buildings. Once the institution received the green light for construction, it reached a “payment in lieu of taxes” agreement with Newton officials. However, when the city learned of the community’s entrance fees, officials took a different approach.

“We felt the pilot agreement wasn’t the way to go,” said Elizabeth Dromey, director of assessing for Newton.

Lasell Village takes a different approach to retirement living. Emphasizing its location on the campus of Lasell College in Auburndale, a village of Newton, Lasell requires that all of its senior residents complete at least 450 hours a year of learning requirements, which may include a combination of classes at the college, mentoring, travel experiences, physical fitness and continued employment.

“These are people who want to be lifelong learners; we believe this is the next generation,” de Witt said. “They want to be productive. Traditional life care doesn’t provide this outlet. People often get sucked into the passivity but at our facility, even if they’re on walkers, people are always on the go.”

Fee Feud

But residency comes with a price. One-bedroom apartments cost between $240,000 and $560,000 while two-bedroom units range from $430,000 to $775,000. A second occupant costs $30,000 and underground parking is another $20,000. Residents also must pay monthly service fees, which in 2001 ranged from $1,650 to $3,000.

Those fees were the first signal to Newton’s Assessing Department that Lasell Village should not exempt from taxes under the charitable organization clause, Dromey said.

State law requires that property-tax exempt organizations must own the building in question, occupy the property and serve a charitable purpose. To be classified as an educational institution for property tax purposes, an organization also must prove that its activities are predominantly orientated toward education.

Lynch says that Lasell Village failed to prove any of those claims.

“Indeed, the established fees make it clear that the patronage of both low- and middle-income elderly is neither sought nor accepted,” he wrote in a brief filed with the Appellate Tax Board.

As far as the educational component is concerned, Lynch said that while Lasell Village’s education programs are open to the public, it offers a small number of lectures and courses, many are led by Village residents and the overall program isn’t popular with neighbors.

“Even at 20 attendees per year, the Lasell Institute for Learning in Retirement would generate only approximately $1,500 per year for Lasell or 0.03 percent of the $4.7 million in annualized monthly service fees that Lasell receives from the village residents,” the brief said.

But de Witt stands firmly behind Lasell’s uniqueness. “We’re very different and we believe that the courts didn’t have us in mind when they looked at the other cases,” he said.

Lasell isn’t the first institution to challenge a Massachusetts city’s property tax exemptions. At least two other cases have been brought forward, including one in Springfield and another in Westborough.

“Everyone wants to be exempt. That’s the bottom line,” Dromey said.

In May 2001, the state’s Supreme Judicial Court reinforced Springfield’s right to collect property taxes from a senior citizens complex run by a nonprofit organization called Reeds Landing. The decision ensured that the city could still collect $411,000 a year in property taxes.

“This was a very important case in clarifying whether an organization qualifies as a charity,” said Richard Allen, chairman of the Springfield Board of Assessors.

Dromey said that the Springfield case gave Newton the extra push to challenge Lasell’s claim of property tax exemption. A similar case will be argued next month.

In the third case, Westborough assessors will argue that because the Willows at Westborough, an independent- and assisted-living facility, doesn’t accept Medicare clients, it should not be exempt from property taxes.

“It’s important to parse the difference in exemption,” Lynch said. “It’s subtle but very significant. Large amounts of money swing in the balance here.”